Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank Deputy Pringle for the work he has done on this Bill. I also thank the staff and the bodies advising him, such as Trócaire. It is appreciated. I am somebody who wants to be helpful and I am very glad to hear the interaction between the Deputy and the Government agencies has been good. We have not gone all the way towards what the Deputy desires, but while we may not always agree and while we will see how it goes, I am very open to matters being reconsidered on Report Stage. I want to be helpful on all Stages and I want to be facilitating. As Deputy Pringle said, this is the first occasion on which such legislation has been considered anywhere. That said, I want to make sure we do not pass legislation that could have unintended consequences. We all know that sometimes happens. I am happy to be as facilitating and helpful as I can.

Despite progress made, full agreement on proposed amendments has not been reached, and Deputy Pringle's text contains a number of issues that would make ISIF extremely difficult to operate in terms of investments in Ireland and globally. The key difficulties with amendment No. 1 can be grouped. The proposed definition of "fossil fuel" cannot be accepted as it is not sufficiently precise from the Government's viewpoint, with the inclusion of "gas" in the definition not aligned with the State's climate change and energy policy. Gas is key in supporting the transition to a low-carbon economy. The amendment also provides a definition for a "fossil fuel business", which includes the terms "exploration", "extraction" and "refinement". It is positive that the definition no longer mentions "processing" and "delivery".

When considering these proposed amendments, it is important to consider that the ISIF discretionary portfolio has two key components: first, the Irish portfolio, which includes the direct and indirect investments by ISIF in support of its mandate; and second, the global portfolio, which includes the balance of ISIF in advance of its investment in Ireland. At present, the funds in the global portfolio are invested in funds to earn a return until the funds are required for investment in projects in Ireland.

In this time of negative interest rates and negative returns, it is a challenge for the global portfolio to earn a sufficient low-risk return to ensure that its funds are protected and remain available for investment in Irish projects. The proposed amendments would make it very difficult for these investments to continue, thus making it more difficult for the ISIF global portfolio to earn a return to protect and maintain these funds. The committee needs to consider very carefully any proposed amendments that could lead to a loss of State funds. That said, the prospect of a money Bill being outlined is not being considered here. What I would like to do is reach a position on which we can all agree rather than propose that this has a financial impact on the State.

In discussions with Deputy Pringle, it has been highlighted that to make the Bill workable, certain thresholds should be inserted that would serve as a cut-off point for ISIF's exposure. The amendment in this regard seeks a 15% threshold across the full range of fossil fuel exposures. However, ISIF has advised, based on international experience, that different threshold levels should be applied to each fossil fuel type. This would provide for varying thresholds in line with carbon emittance, meaning the worst fuels would have lower thresholds. It is important to note the setting of the higher 50% statutory threshold does not preclude ISIF from setting lower thresholds within its sustainability and responsible investment policy.

ISIF already has thresholds of 30% for thermal coal and 10% for oil sands, both of which preclude investment in a number of companies. The setting of these thresholds through the sustainability and responsible investment policy ensures that ISIF can go to lower thresholds on an operational basis without a risking a statutory breach when the level is set at 15% or above. A wider and even more serious risk is that, as a result of the proposed statutory requirements relating to a Minister making an order-assessment on individual investments, all of ISIF's investments could be brought on-balance sheet. This would have a significant impact on public expenditure as any spending by ISIF would require a reduction in wider public spending to meet the expenditure benchmark.

A further complication arises from the requirement for ISIF to publish an assessment of how an investment contributes to the national transition objective two months prior to making that investment. While the provision allows for the protection of commercially sensitive information, this is not sufficient. The release into the public domain of any level of detail regarding an investment in advance of its finalisation could expose ISIF to litigation by co-investors or client companies.